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The Fed is raising the interest rate by 0%. Here’s what that means.


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(DerFussi / Flickr)

The Federal Reserve has announced how much it'll raise interest rates in June. The number, as it happens, is 0%.

The Fed started out this year expecting quarterly increases. It decided to hold back in March because the economy wasn't looking so good, and now it's done the same thing for June, possibly due to a rather terrible May jobs report.

Remember, interest is the fee you pay for borrowing money when you pay back a loan. Raising interest rates tends to slow down the economy, so it's something that the Fed only wants to do when business is booming.

However, Fed Chairwoman Janet Yellen says the economy isn't totally tanking:

"I see good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones."

Also in support of that view? The Dow Jones industrial average and S&P 500 are both pretty high right now. Dow Jones hit 18,000 for the first time since April, and the S&P had one of its best days since last July.

While the Fed may have passed on raising rates this month, Yellen indicated that she does expect them to go up later in the year.

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The Fed is raising the interest rate by 0%. Here’s what that means.

Dana Brown

Dana is a freelance writer from Florida, the state that winter forgot. She likes video games, cats, fantasy novels, and complaining about the weather. Follow her on Twitter for intermittent whining about the First Amendment.

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